When it comes to getting the best return on investment in the housing market, one real estate investor swears on student housing.
“I think that's the safest bet in real estate,” said Rogers Healy, CEO and Owner of Dallas real estate company Rogers Healy and Associates.
The student housing market is what initially drew Healy to real estate: He gained his footing in the real estate market as an undergraduate at Southern Methodist University in 2001.
“If I could go do it all over again, I would have taken what I learned pretty early on as a college student about helping find my friends an apartment and I would have parlayed that into doing some development deals,” Healy said. “I think it's as guaranteed money as you can get, whether the school is paying for it, the parents are paying for it, or they have some kind of scholarship or stipend.”
The focus on student housing may seem counterintuitive given the drop-off in college enrollment during the pandemic and the increase in students taking a gap year. But Healy maintained that finding housing for undergrads is still "easy money."
"I know that right now, college applications are at an all-time low," he said. "But I think those trends are going to shift here in the next few years as well because people my age who went to college want their kids to go to college because we're getting older."
'Millennials are the driving force'
Sending children off to university is just one way millennials could shape real estate in the coming years. Zillow forecasts that 6.4 million more households will be formed by 2025 as the largest U.S. generation and hits 34 — the prime age for first-time homebuyers.
“I'm 42 years old, and I've been in real estate half of my life. And for the first half of my real estate life, millennials were the enemy,” Healy said. “They were the ones that were driving rent prices, and they weren't able to go and afford property. And next thing you know, you know, whether it was pandemic fueled or not, millennials are the driving force, where we have almost 50% of buyers nationwide, especially in a city like Dallas, they're the ones that are making the decisions.”
Millennial wealth has doubled since the COVID-19 outbreak from $4.55 trillion at the end of 2019 to $9.13 trillion by the end of 2021, according to the Federal Reserve.
However, housing costs have also surged for millennials who are just now getting their foot in the door of the American dream of homeownership. The reality of higher mortgage rates, a lack of affordable housing, and low inventory means buyers may not be able to afford their forever home yet. And renters are also facing an uphill battle.
“So, interest rates, obviously, are higher than they were a month ago, higher than they were a week ago. But we still have rising rental rates as well,” Healy said. “So if people want to go and get into the American dream, and they want to go own real estate, they're going to have to shift their mindset and realize that you might not live there for 10 years. You might be there for two years.”
That’s good news if you’re a realtor looking for sustainable success as buyers seek out their next move at a faster pace.
Like student housing, Healy also expects the commercial market to come roaring back as workers return to the office and pent-up demand outstrips consumers' inflation concerns.
"I think commercial usually is two to three years behind the trends of residential, and we do a lot of commercial deals here in [Dallas-Fort Worth]," Healy said. "And I think, again, whether it's expanding our office space here, where 2 and 1/2 years ago... if someone would have told me we were going to 5x our space in two years, I would have said, 'You're crazy.' But now we're literally busting at the seams because people want to come back to the office."
“The experience we missed out on with retail, with going to dinner, going to get frozen yogurt, to a coffee, whatever, those things are starting to catch up as well," Healy said. "So we see a significant shortage of office space, retail, but especially industrial."
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